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LAWRIE WILLIAMS: China’s SGE revises gold withdrawals lower

We had previously noted some anomalies in the reported figures for China’s gold withdrawals from the Shanghai Gold Exchange (SGE) and are pleased to note that a recheck has shown that the monthly and cumulative figures as announced by the SGE now tally.  Earlier the announced cumulative total appeared to have been substantially adrift from that suggested by the monyh-by-month reported figures.The principal change is a sharp downwards revision of the gold withdrawal figures for February – a month where figures tend to be somewhat anomalous anyway because of the Chinese New Year holiday.  February figures have been revised downwards sharply from 179.24 tonnes to 148.24 tonnes, while the initially reported April figure of 171.17 tonnes has been adjusted downwards to 165.78 tonnes.  This brings the cumulative total for the year to date to 690.68 tonnes –only marginally higher than at the same time a year ago, and well down on the record 2015 figure.

Table: Revised SGE Monthly Gold Withdrawals (Tonnes)

Month

2017

2016

2015

% change 2016-2017

% change 2015-2017

January

184.41

225.08

255.42

- 18.1%

 -27.8%

February*

148.24

107.60

156.36

+37.8%

-5.2%

March

 192.25

183.24

213.35

 +4.9%

 -9.9%

April

 165.78

171.40

195.45

 -3.3%

 -15.2%

May

147.28

162.15

June

138.51

195.67

July

117.58

285.50

August

144.44

265.27

September

170.90

259.98

October

 153.25

176.29

  

November

 214.72

202.71

  

December

 196.37

228.21

    

Year to date

690.68

687.02

820.58

+0.5%

- 15.8%

Full Year

 1,970.37

2,596.37

Source: Shanghai Gold Exchange, Lawrieongold.com

The previous cumulative total had been substantially in excess of the revised figure which led us to speculate that demand could be higher than the stated monthly totals would have suggested, but in the event it appears that couple of the monthly totals – notably February – had been strongly overstated and we are now having to revise our own forecasts downwards.  Given that the year to date cumulative figure is close to that recorded at the same time last year we would tentatively suggest that the overall figure for the year may well be similar to that for 2016 at less than 2,000 tonnes.  Still substantial, but well below the 2015 annual total which was an all-time high close to 2,600 tonnes.

While some analysts dispute this we consider SGE gold withdrawals a proxy for total Chinese gold demand.  If one adds together known gold imports (from countries which report their gold flows into mainland China – notably Hong Kong, Switzerland, the UK, the USA and Australia) plus a small estimate of non-reported imports from other gold producing countries, plus China’s own gold production, plus an estimated scrap supply - and the overall total comes out pretty close to the total annual SGE withdrawals figure.  With Indian demand this year having picked up strongly too, the massive gold flows from West to East still come close to total global production of new-mined gold.

23 May 2017 | Categories: Gold, China

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